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___ 26. The opinion that

___ 26. The opinion that economic growth cannot be sustained in the future is based on which of the following ideas? a. the world’s population is growing faster than its capacity to produce food b. economic growth combined with population growth will hasten the depletion of nonrenewable resources c. economic growth combined with population growth will hasten environmental degradation d. All of the above ___ 27. In the past, as economic growth occurred: a. the real prices of nonrenewable resources generally rose b. environmental quality generally degraded c. Both of the above d. Neither of the above ___ 28. According to the viewpoint that economic growth can be sustained: a. as the population grows, the stock of human intelligence and imagination grows b. depletion of nonrenewable resources is not a hindrance to future economic growth c. economic growth leads to environmental improvement rather than degradation d. All of the above Problems: 1. List the four determinants of economic growth. 2. Explain the relationship between saving and increases in capital. 3. List four governmental policies that strengthen private property rights. FOR REVIEW ONLY - NOT FOR DISTRIBUTION 14 - 15 Economic Growth

4. Why is it possible to achieve an ever-increasing standard of living, according to new growth theory? Answers for Chapter 14 Fill-in-the-blanks: 1. Absolute 2. Per capita 3. Technological 4. Industrial Multiple Choice: 1. c. 11. d. 21. d. 2. d. 12. d. 22. b. 3. b. 13. b. 23. d. 4. a. 14. c. 24. a. 5. d. 15. d. 25. a. 6. b. 16. d. 26. d. 7. c. 17. d. 27. d. 8. c. 18. d. 28. d. 9. b. 19. d. 10. d. 20. b. Problems: 1. The four determinants of economic growth are: (1) Natural resources (2) Labor (3) Capital (4) Technology 2. Increases in capital are made possible by saving. Resources must be used to produce capital goods instead of consumer goods. 3. Governmental policies that strengthen private property rights include: (1) Enforcement of private property rights by both criminal and civil law. (2) Relatively low tax rates. (3) A minimum of government regulation. (4) A minimum of government corruption. 4. According to new growth theory, an ever-increasing standard of living can be achieved because the technological advance made possible by new ideas is virtually unlimited. New ideas are virtually unlimited. And once a new idea is developed, it is not subject to the law of diminishing marginal returns because the new idea can be used by everyone. FOR REVIEW ONLY - NOT FOR DISTRIBUTION Economic Growth 14 - 16